ORDER
Hakeem, J.
1. This revision petition under section 23(1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act) is directed against the order dated 12th June, 1978 passed is S.T.A. No. 153 of 1976 by the Karnataka Appellate Tribunal, Bangalore, confirming the levy of purchase tax under section 6 of the Act in respect of the turnover of raw cashewnuts for the assessment year 1st October, 1970 to 30th September, 1971.
2. The petitioner, which is a company, is a dealer carrying on business in cashewnuts, chemical, fertilisers, copper sulphate, gunny bags and other commodities. The petitioner is also having its cashew factory and coffee curing works. For the period from 1st October, 1970 to 30th September, 1971 the petitioner-company declared the total and taxable turnover at Rs. 3,85,90,385.96 and Rs. 71,50,695.93 respectively. The assessing authority rejected the declared turnover and estimated that same at higher figures. In this petition, however, we are concerned with that part of the turnover relating to the purchase of raw cashewnuts that has been taxed under section 6 of the Act. The assessing authority has determined the value of the purchase of cashew under section 6 of the Act of Rs. 35,24,149.54 and levied thereon tax at 6 per cent. The assessing authority also levied tax on the sale of cashew kernels at 2 per cent. on a sum of Rs. 13,56,548.61. The assessing authority held that the raw cashewnuts purchased by the petitioner within the State from parties who are not registered dealers are used in the manufacturing process to produce chasew kernels which were sold within the State and in the course of inter-State trade or commerce. On appeal the first appellate authority, viz., the Deputy Commissioner of Commercial Taxes (Appeals), Mangalore Division, Mangalore, confirmed the tax levied by the assessing authority. The petitioner took up the matter in second appeal before the Karnataka Appellate Tribunal, Bangalore, which has by the impugned order party allowed the appeal holding that the levy of tax on the sales of cashew kernels on a sum of Rs. 13,56,548.61 was not correct in view of the explanation VI to the Second Schedule to the Act. However, the levy of tax under section 6 of the Act on the purchase of raw cashewnuts of the value of Rs. 35,24,149.54 was confirmed.
3. The short question which arises for consideration in this petition is, whether 'cashew and it kernel' in item 88 of the Second Schedule are two different commodities or in substance only one commodity.
4. Before dealing with the contentions advanced it may be appropriate to refer briefly the bio-data of entry 88. Originally, item 11 read 'cashew and its kernel' in the Third Schedule to the Act. It was with effect from 1st October 1957 only single point purchase tax was leviable under section 5(3)(b) of the Act. By the Karnataka Sales Tax (Amendment) Act, 1970 (Act No. 9 of 1970) the said item 11 in the Third Schedule was omitted and the same was inserted as item 88 in the Second Schedule to the Act prescribing levy on the first or earliest dealers liable to pay tax under section 5(3) of the Act. However, item 88 also read as 'cashew and its kernel'. By the same amending Act No. 9 of 1970, explanation VI was added to the Second Schedule, which reads as under :
'Explanation VI - Where a tax has been levied in respect of cashew under item 88, the kernel pressed out of the said chasew shall not be liable to tax under this Act.'
By the Karnataka Sales Tax (Amendment) Act, 1981 (Act No. 7 of 1981) for the item 88, item 88 and item 88A have been substituted with effect from 1st April, 1981. The items now read as follows :
'88 Cashew Six per cent.
88A Chasew kernel Six per cent.
5. To make the picture complete, we may also refer to the relevant part of section 6 of the Act.
'6. Levy of purchase tax under certain circumstances. - Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and
(i) either consumes such goods in the manufacture of other goods for sale or otherwise or dispose of such goods in any manner other than by way of sale in the State, or
(ii) * * * shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 5 : ........'
There conditions have to be fulfilled for the levy of purchase tax under section 6 of the Act, viz., (i) the dealer must have purchased the goods in the course of business, (ii) that the sale of the said goods must not have been subjected to tax under section 5 of the Act and (iii) that the goods are either consumed in the manufacture of other goods or sold or disposed of in any other manner.
6. Mr. Srinivasan, learned counsel for the petitioner, has contended that cashew and its kernel are not two different commodities, but in substance only one commodity and therefore, the levy of purchase tax in respect of purchase turnover of cashew of Rs. 35,24,149.54 under section 6 of the Act is not justified.
7. The thrust of Mr. Srinivasan's contention is based upon the fact that 'cashew and its kernel' are mentioned under the same heading in the Second Schedule, and the legislative intent must therefore be to treat the said commodities as one commodity for the purpose of levy of tax. He further contended that the subsequent amendments effecting bifurcation if item 88 into two items as 88 and 88A by Act No. 7 of 1981 and insertion of explanation VI to the Second Schedule under the Karnataka Act No. 9 of 1970, are clear indication of the original legislative intent to treat 'cashew and its kernel' as one commodity. On the contrary, the contention of Mr. Rajendra Babu, learned High Court Government Advocate, was that 'cashew and its kernel' are two distinct and different commodities. That the conversion of raw cashew into edible kernel involves the manufacturing process by which the latter becomes a different commercial commodity for sale. As such the purchase turnover of raw cashew is exigible to tax under section 6 of the Act.
8. In State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory [1953] 4 STC 205 (SC) the Supreme Court has observed 'that cashewnuts and kernels manufactured out of them by various processes, partly mechanical and partly manual, are not commercially the same commodity'.
In A. Hajee Abdul Shukoor & Co. v. State of Madras : [1964]8SCR217 the Supreme Court has approved the above view by observing :
'Reference may also be made to state of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory [1953] 4 STC 205 (SC) in which it was held that raw cashewnuts become a different commodity commercially after the application of certain process as a result of which they are converted into edible kernels.'
It is thus well-settled that 'cashew and its kernel' are two commercially different commodities.
9. Mr. Srinivasan, however, strongly relied upon the decision of the Andhra Pradesh High Court in Singh Trading Company v. Commercial Tax Officer, Srikakulam [1979] 44 STC 1 in which it has been held that 'cashew and its kernel' cannot be construed as to different commercial commodities and are not separately taxable.
10. The Andhra Pradesh High Court has not doubt referred to the decisions of the Supreme Court in S.V.C. Factory's case [1953] 4 STC 205 (SC) and Hajee Abdul Shukoor's case : [1964]8SCR217 , but did not follow them on the ground that the observation of the Supreme Court cannot be taken as conclusive pronouncement on the question. But with due respect we are unable to agree with the view taken by the Andhra Pradesh High Court. It appears to us that the Supreme Court has taken a definite view on the question that the raw cashewnut become a different commodity commercially after the application of certain process as a result of which they are converted into edible kernels.
11. As to the next contention of Mr. Srinivasan that 'cashew and its kernel' are mentioned under the same item and it is therefore indicative of the fact that they constitute one commodity, cannot also be accepted. There cannot be an inevitable inference on this ground. That the subsequent amendment bringing them under two entries is only clarificatory in nature is implicit.
12. In A. Hajee Abdul Shukoor & Co. v. State of Madras : [1964]8SCR217 , the Supreme Court dealing with a similar question pertaining to the item 'hides and skins' under the Madras General Sales Tax Act, observed :
'The fact that certain articles are mentioned under the case heading in a statute or the Constitution does not mean that they all constitute one commodity. The inclusion of several articles under the same heading may be for a reason other than that the articles constitute one and the same thing.'
13. Mr. Srinivasan referred to explanation VI and urged that the legislative intent in inserting explanation VI in the Second Schedule to the Act was to treat both 'cashew and its kernel' as one and the same commodity.
14. It seems to us that explanation VI is in the nature of an exemption clause which provides for exemption of kernel from the tax at the sale point if tax had been paid on the purchase of cashew. This is obviously a concession extended by the Legislature to keep down the price of edible kernel and not indicative of any other intention of the Legislature.
15. Admittedly the petitioner had purchased cashew from the parties who have not paid tax under the Act. It is not in dispute that raw cashews are consumed in the manufacture of cashew kernels. All the conditions prescribed in section 6 of the Act having been thus Satisfied, the levy of tax on the purchase turnover of cashew is, therefore, fully justified.
16. In the result, the petitioner is dismissed. In the circumstances there will be no order as to costs.